Friday, January 2, 2015

Surprise! 2014 is over, and the U.S. did NOT double exports from 2009

You won't hear much these days about the National Export Initiative to double U.S. exports from 2009 to 2014. That's because the initiative failed miserably. U.S. exports increased only 44.9 percent over those four years, while imports (the other part of the story) rose by 48.4 percent. Our trade deficit rose by $117 billion.

Here's one person who predicted failure: Palm Desert resident Irving “Pete” Vigdor. Vigdor astutely noted that multinationals account for 50 percent to 60 percent of U.S. exports -- and they're happy if exports increase as much as 6 percent annually. Which doesn't get us to a doubling in four years.

Here's another reason the National Export Initiative failed: currency manipulation. Rob Scott at the Economic Policy Institute recently wrote,
The most important reason behind the failure to double U.S. exports over the past five years has been our inability or unwillingness to address currency manipulation. Ending currency manipulation would have reduced the U.S. trade deficit by between $200 and $500 billion. It would have slowed the growth of imports and increased goods exports alone by more than $1 trillion, enough to achieve a real doubling of exports. Better yet, it would have created between 2.3 and 5.8 million net new jobs, increased GDP by between $288 and $720 billion (2.0 to 4.9 percent) and reduced the budget deficit, at no cost to the government. 
Despite this, Congress has failed to pass legislation to end currency manipulation, such as Rep Sander Levin’s Currency Reform for Fair Trade Act (HR1276) and Sen. Sherrod Brown’s Currency Exchange Rate Oversight Reform Act (S. 1114), the Obama administration has not designated China as a currency manipulator (or any of the other 20 countries that have followed similar policies since at least 2001), and the administration’s has failed to take more meaningful steps to stop currency manipulation, such as instituting withholding taxes on government assets held by the foreign central banks of currency manipulators.
Another reason imports didn't double: bad trade deals like the one with Korea. Dave Johnson notes at Op-Ed News,
According to Public Citizen's Global Trade Watch, exports to Korea are down 11 percent and the trade deficit with Korea has gone up 47 percent since this agreement was signed. According to the Economic Policy Institute 60,000 American jobs have been lost (mostly in manufacturing), exports to Korea are down 7.5 percent and the trade deficit is up 59.6 percent.
And now the same people who pledged to double exports and failed are trying to grease the skids in Congress for another bad trade deal: the Trans-Pacific Partnership.

Vigdor  points out in the The Desert Sun why that, too, will fail to increase exports: 
Brunei has already started to build clothing manufacturing factories for export to the U.S. The only business this tiny island country does with us is to buy parts for its oil rigs. Malaysia, a large country, does no business with us at all. Yet, our president is happy to open our markets to them which historically, has cost us jobs. 
Our trade agreements largely benefit our trading partners, whose exports into our huge consumer markets surged dramatically. Sure, our exports increased a bit, because our relatively small trading partners could not possibly absorb the quantities we need to export to get anywhere near parity. 
The end result of these trade agreements is that we literally exported millions of American jobs. It’s no secret that some Americans who lost jobs due to imports receive stipends from the government that, in one sense, actually subsidize low-cost manufacturing countries.